The Market in Brief:
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AUDEUR: The AUD closed the week about 0.25% lower against the EUR. It has now spent the last 5 weeks trying to break the solid levels of resistance which have held since November last year. The dire situation in Europe has not changed and EUR rallies have been getting progressively lower since August last year. The main data out of Europe this week is the German ZEW Economic Sentiment on Tuesday night, while we have the RBA minutes earlier on Tuesday and the unemployment rate Thursday
AUDGBP: The AUD closed the week almost 1.5% higher against the GBP to narrowly eclipse the post-Brexit highs. There is important data out of the UK on Tuesday, Wednesday and Thursday night so we expect volatility. In breaking news UK ministers are reportedly in discussions over a delay in triggering Article 50, the formal process of leaving the European Union, which could see Britain remain a member of the bloc until late 2019. CFTC data for the week showed speculative accounts of net GBP shorts reached a record level which suggests there will be a correction in the GBP.
AUDNZD: AUD finished the week down 0.5% against the Kiwi which was the strongest performing currency of the week. The RBNZ cut rates by 0.25% but the market seemed to be expecting a 0.5% cut and Kiwi initially gapped higher. That was short lived and the currency fell and filled the gap. The market is expecting another 2 cuts later in the year so if we only get 1 cut it will give the NZD a boost.
AUDJPY: The AUD closed the week down a mere 15 points with the JPY the second strongest performing currency of the week, marginally behind the Kiwi. Yesterday Japanese GDP printed below expectations at 0.00% V expected 0.2% but it failed to have any impact on the currency. Prime Minister Abe must be concerned that firstly his stimulus packages are not working and secondly falling below market expectations so this is keeping the JPY strong and hurting exports. Expect more stimulus soon.
AUDCHF: The AUD closed the week down a tiny 6 points against the CHF. Resistance sits 100 points higher where it has held for 16 months.
Compass Global Markets Team.